UPS Eyeing Sunday Delivery Service?

Source: UPS
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According to a Wall Street Journal article, UPS and the Teamsters union are talking about a two-tier wage system. The Teamsters union represents all UPS full-time parcel delivery drivers in the US.

The idea of the two-tier wage system would allow UPS to hire lower-paid workers to deliver packages on weekends, including Sundays.

The proposal raised in negotiations calls for a “hybrid” driver position that would earn as little as $15 an hour and top out at $30 an hour. This position would work either a Sunday through Thursday or Tuesday to Saturday schedule.

Utilizing existing drivers or drivers under the standard contract would be costly as drivers are hired for Monday – Friday shifts and earn overtime working Saturday or Sunday. In some areas that could result in hourly pay of nearly $74.

Last year UPS started to offer regular Saturday delivery in many major metro areas, but expanding to Sunday delivery would require an even greater number of drivers.

READ MORE: UPS Adding Saturday Ground Operations in April

In the contract for its Monday – Friday drivers, this means that virtually all deliveries on weekends would be overtime, and that could be a very expensive proposition for the company as eCommerce grows.

UPS appears eager to finalize a new deal with drivers by July 31 as that is when the current contract runs out. The concept of a “hybrid” driver is controversial among the Teamsters leadership and members and has inflamed divisions within the union.

UPS CEO David Abney claims to be confident the two sides would reach an agreement in time, but there is no word if that means with or without the “hybrid” driver addition.

Amazon Sunday Delivery to “Blame?”

As is often the case with new ideas in eCommerce, Amazon has to take the blame (or credit) for UPS even considering Sunday deliveries.

In 2014, when Amazon expanded its deal with the US Postal Service to include Sunday delivery, the service took off faster than even many customers expected.

Before then it was a novelty to see a USPS mail delivery van on Sundays as the postal service only delivered high priority express shipments.

But with the growth by Amazon, the eCommerce giant has used USPS for Sunday deliveries in many areas, in addition to offering Sunday deliveries from its own logistics network.

Currently, there is no other eCommerce company that can offer “regular” Sunday delivery without paying extraordinary fees for high priority Sunday shipments in select markets with USPS or other couriers.

While USPS has not offered standard Sunday parcel delivery to other firms, it is possible that may be under discussion.

However, Amazon manages most of the backbone logistics for USPS and the postal service only handles the local portion of the Amazon package journey.

Therefore, USPS is not ramped up to offer Sunday service to smaller eCommerce businesses and only a company like Walmart or Target with significant logistics resources would likely be able to work with USPS directly to offer 7-day delivery service.

Amazon’s startup logistics operation SWA (Shipping with Amazon) is still too new and likely won’t be a nationwide service for many years. While SWA can start out by offering 7-day delivery, it will be geographically challenged.

And retail or eCommerce competitors are unlikely to want to help Amazon grow bigger by supporting its logistics network.

READ MORE: Amazon to Take on Fedex and UPS with ‘Shipping with Amazon’

And finally, it is possible that FedEx is considering Sunday delivery through its Ground Home Delivery service. So far, FedEx offers Tuesday – Saturday delivery on Home Delivery.

Unlike UPS and others, FedEx maybe in the best position to ramp up nationwide Sunday delivery as their local ground delivery is operated by independent contractors that bid on routes. Therefore they don’t need to negotiate a union contract to implement service changes.

Still, FedEx would have to make changes to the backbone logistics that transport packages between terminals to offer Sunday delivery.

But the company is mostly non-union in that area as well, so changes in operating hours are far easier and less costly to implement.

FedEx Express Services are mostly managed through another logistics network and with company employed drivers and it is unlikely it would be included in “standard” 7-day operations.

That would require adding flight operations and that doesn’t appear to be a feasible idea at the moment.

It is likely that potential competitive pressures by FedEx, USPS, and SWA are forcing UPS to at least consider Sunday delivery.

While there are no concrete plans by UPS to introduce Sunday delivery, but by trying to add the possibility into the new contract with its drivers, it would allow the courier to expand to Sunday delivery if necessary.

7-Day Delivery

As Amazon continues to grow at exponential rates in eCommerce, it forces smaller eCommerce companies to look at better delivery options.

The company appears to be pushing for two-day service in most locations for Prime deliveries, going away from the two-business-day promise of years past.

READ MORE: The Value Proposition For Amazon Prime

There is a real need for a courier company to step up and offer a reasonable Sunday delivery service as consumers accustomed to Amazon delivery “standards” will require pushing for even faster delivery options.

It makes a lot of sense for UPS considering Sunday delivery because as the largest parcel delivery service in the US, they have the most to lose if a competitor beats them to the market.

The speed of changes in eCommerce also makes it necessary for UPS to stay nimble and work with its union drivers to come up with a fair deal to make 7-Day delivery possible.

7-Day delivery service in the US is not an IF conversation, but a WHEN conversation.

How important do you think 7-Day delivery will become for eCommerce in the U.S.? Head over to our Facebook Discussion Group or use the comments section below to let us know.

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